Disability Insurance

Group insurance is not portable because you do not own the coverage. When you leave the employer or association which provides the group coverage, the coverage terminates.

Individual policies stay in force regardless of your employer because you own the coverage with the insurer. If you decide to wait to get an individual policy until when you leave your group benefits, will you qualify medically or lifestyle-wise at that time? Will you be in the same good health you are in now and will your family history (parents and siblings) be in good health too?

Group long-term disability (LTD) insurance generally has a narrower and more limited definition of disability. Group coverage often may define disability as the inability to work in the same occupation for the first two years (“own occ”) and thereafter the inability to work in any reasonable occupation (“any occ”). The disability must then be so severe to prevent the claimant from working a cash register or as a greeter at Walmart, for example. Individual professional policies provide a much more liberal definition of disability. These “own occ” individual policies trigger insurance payments if you cannot work in your occupation, even if you are working in another occupation. And without “own occ” on your individually owned plan, you are covered under “regular occ”, which means that if you cannot work in your occupation and choose to not work in another one, then you remain on claim, which is still much better than the “any occ” definition.

Group LTD will also often require you to make a claim on Total Disability before you are able to make a claim on Partial Disability. Total, partial, residual, and presumptive definitions of disability are often all included in an individual professional plan, making it a much more seamless process should a claim occur.

Individual LTD insurance allows for a cost of living adjustment (COLA) as an optional rider whereas group LTD does not. The adjustment does cost extra but may be a valuable feature for individuals worried about the impact of inflation on future benefits. The COLA is typically adjusted according to the Consumer Price Index (CPI) of Canada with a minimum of 2% up to a maximum of 10%, compounded annually.

Group plans can be cancelled or worsened by your employer or by the insurance carrier at any time or rates can be increased across all participants. Alternatively, individual policies provide the option for guaranteed pricing and definitions within the contract (“non- cancelable”) where the insurer cannot change the premiums. You, as the client may cancel or change your plan to remove items at any time. However, the insurance company cannot.

Group LTD payouts are generally reduced (offset) by related payments from workers’ compensation and government disability payments. This is not true for all individual policies. If you get an individual professional plan in place before you work for your employer and are covered under their group LTD, your individual policy is first payor and has better definitions of disability. It will pay out to you, if you make a claim. It also has a feature, called the Future Income Option (FIO), which will allow you to increase your monthly benefit amount, should your Group LTD ever change, be taken away, or if you leave your employer down the road. This locks in your future insurability, in case your health or that of your immediate family were to change, or should you begin doing risky activities (rock climbing, back country excursions, piloting a plane, racing bikes, etc. To increase your monthly benefit amount, you do not need to qualify medically, but rather financially – showing proof of your earned income to justify the increase. Therefore, it is valuable to get a small individually owned plan in place, even if you will be covered by your employer.

Dan and I pride ourselves on assisting our clients, should you need assistance come claim time. We are able to advocate on your behalf with the adjudicator. This is not the case with Group LTD.